Application of Electronic Enablers for
Supply Chain Management Case Study of Dairy Products
Pouria Ghaternabi@PouriaGhatrenab
Agenda Industry overview Upstream Supply Chain Downstream Supply Chain Supply Chain Challenges Traceability Case Study
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Dairy Industry Overview
85%
1.4%0.2%
11.1%2.1 %
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Consumption
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Production
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Milk Supply Chain Functions
Upstream Supply Chain Downstream Supply Chain
Co-operatives Direct from Farm
Dairy Boards
Milk Collection Sources
Small CooperativeDirect FarmDairy Boards
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Upstream Supply Chain
Down Stream Supply Chain
Dairy Products
Processing Plant
Retailers Distribution Center
Transportation
Labeling Manufacturin
gPackaging
Corrugated Paper / Plastic
Company
ConsumersMaterials Flow
Information Flow
Dairy Industry ChallengesDiverse Food categories
Price Deflation
Power shift in industry
• Milk & other goods• Beverage to powder• Solid to viscous• Packaging: canned, bagged, boxed
• Low-margin business• Customers demanding lower prices
• Power shifting from manufactures to Retailers (Wal-mart, etc)
• Everyday low prices strategy
Need to deal with the complexity and
decreasing prices
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Dairy Industry ChallengesSeasonal fluctuations
Changing quality of raw materials.• Farmers can produce as much or
as high a quality during certain seasons of the summer
Consumer demands changes based on seasons. • More ice cream in summer, less
in winter.
Need to control and efficiently manage
variances in the quality and quantity of raw milk
collected
Lack of access to real-time data about the milk can lead to inefficient raw material utilization and inaccurate
demand planning and forecasting further down the supply chain
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Dairy Industry ChallengesChanging consumer taste and requirements (Mass customization)
Food safety and security legislations
• Diverse population with differing tastes.• Changing lifestyle (more health
conscience)• Expect High Quality, availability, and
value.
• Contamination• Bio-terrorism• Traceability laws
Need to produce and deliver increasingly diverse product lines
with differing labeling & packaging requirements
Need to increase the integrity and accountability of the supply chain.
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Traceability in the Dairy Industry
Widely deployed technology is electronic traceability systems such as ERP systems. Bar-Codes, RFID tags and Computer produced labels are pervasive in the dairy foods industry.
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Why Traceability is Important
Improves efficiencies and effectiveness in the supply chain process.
Easy search and quick access in all systems involved in the supply chain.
Monitoring of product movement and information relating to product quality.
For product recall and withdrawal.
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RFID enabling supply chain of milk from farm to store
IN THE FARM For identification of cows Enables automated calf feeding. It facilitates the use of automatic drafting
gates in some farms. Utilized to monitor the entrance and
departure of a cow from the milking parlor and to record a cow’s milk production.
IN PRODUCTION PLANT Product Identification. Product Information and Contents. The manufacturer is able to track the
product through wireless radio communication.
RFID TAG
TRADITIONAL TAG
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RFID enabling supply chain of milk from farm to store
IN THE FARM For identification of cows Enables automated calf feeding. It facilitates the use of automatic drafting
gates in some farms. Used to monitor a cow’s entrance and
departure from the milking parlor Used to record a cow’s milk production
IN PRODUCTION PLANT Product Identification. Product Information and Contents. The manufacturer is able to track the
product through wireless radio communication.@PouriaGhatrenabi
Case Study:
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Valio A Finnish Producer of Dairy consumers
products Owned by 18 Finnish milk co-operatives Number 1 and market leader in Finland and
exporter to over 60 countries. Some of Valio’s products are Valio Zero
Lactose™ milk powder, spreads, cheese etc.
http://www.valio.com
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Shipment Process at Valio Milk is chilled, pasteurized,
containerized and placed on trolleys to fill orders.(Automated robotics)
Workers remove cart from conveyor line to staging areas.
Carts are loaded onto trucks.@PouriaGhatrenabi
Challenges in supply chain @Valio
Shipment on to wrong trucks
Shipment at wrong times
Poor visibility of supply chain
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‘‘Tag wheel’’ with built-in Passive UHF tags
http://www.rfidjournal.com/articles/view?11179/@PouriaGhatrenabi
RFID Reader Antennas
http://www.rfidjournal.com/articles/view?11179/@PouriaGhatrenabi
Tag wheel and antennae in use
http://www.rfidjournal.com/articles/view?11179/@PouriaGhatrenabi
Benefits of RFID Technology implementation at Valio
End to end visibility Reduction of Errors in wrong
shipments Software issues instant alerts via
warning lights, text and email in the event of wrong loading or incorrect time.
Reduction in the amount of manual labor.
Conclusion Dairy Industry is has a very complex product
line that is compounded by the products very short life span.
Retailers & Customers are forcing downward pricing pressures on industry.
Demand of dairy products is increasing world wide, necessitating innovation in the supply chain.
Industry is using latest technologies to manage the supply chain and efficiently monitor products.
http://www.youtube.com/watch?v=tVNq_K6fyi8
References(1)
Canadian Dairy Information Center. (2013, 10 10). Canadian Dairy Trade Balance. Retrieved from Canadian Dairy Information Centre: http://bit.ly/1c481HO
Economic Research Service. (2005). United States Department of Agriculture. Retrieved from http://www.ers.usda.gov/Data/InternationalFoodDemand
Faye, B., & Loiseau, G. (2002). Sources of Contamination in Dairy Supply Chains and Approaches to Quality Control. Food Safety Management in Developing Countries. Montpellier.
Gerosa, S., & Skoet, J. (2012, 02). Milk availability: trends in production and demand and medium term outlook. Retrieved from www.fao.org/economic/esa
IFCN Dairy Research Center. (2011, 05). IFCN World Dairy Map 2011. Retrieved from http://www.ifcndairy.org/: http://bit.ly/1broN3p
List of dairy products. (2014). Retrieved from Wikipedia, the free encyclopedia: http://bit.ly/1e3oD1U
(2005). Profitable growth and value creation in the dairy industry, A view from Deloitte and SAP. Deloitte Touche Tohmatsu.
Spiegel, M. v., Fels-Klerx, H. v., & Marvin, H. (2012). Effects of climate change on food safety hazards in the dairy production chain. Food Research International, 201-208. Retrieved from www.elsevier.com/locate/foodres
References(2)
Business, C. (n.d.). Profitable growth and value creation in the dairy industry A view from Deloitte and SAP Table of Contents.
Kelepouris, T., Pramatari, K., & Doukidis, G. (2007). RFID-enabled traceability in the food supply chain. Industrial Management & Data Systems, 107(2), 183–200. doi:10.1108/02635570710723804
Trevarthen, A., & Michael, K. (2008). The RFID-Enabled Dairy Farm: Towards Total Farm Management. 2008 7th International Conference on Mobile Business, 241–250. doi:10.1109/ICMB.2008.39
Prater, E., Frazier, G. V., & Reyes, P. M. (2005). Future impacts of RFID on e-supply chains in grocery retailing. Supply Chain Management: An International Journal, 10(2), 134–142. doi:10.1108/13598540510589205
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